Global trends, earnings, FII trading activity to drive markets: Analysts

Equity markets this week will take cues from global trends, trading activity of foreign investors and quarterly earnings, with TCS kick-starting the results calendar on Thursday, analysts said.

Macroeconomic data announcements and the rupee-dollar trend would also dictate market trends, experts noted.

"The Q3 FY25 earnings season will begin this week, with IT giants and leading financial institutions set to announce their results. TCS and Tata Elxsi will declare results on Thursday, January 9, 2025. Investors will closely monitor individual stock performances.

"Following the earnings season, markets' focus is expected to shift towards the upcoming Union Budget and the policy decisions of the Trump 2.0 administration," Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said.

Foreign institutional investors (FIIs) have been net sellers, while domestic institutional investors (DIIs) have been actively buying. This ongoing tug-of-war between FIIs and DIIs is likely to play a crucial role in determining the direction of the market this week, he added.

"Looking ahead to the second week of the year, several key events are likely to influence market sentiment. The earnings season begins with IT major TCS, a key trigger as any signs of improvement in Q3 numbers could reverse the ongoing trend of FII outflows. Additionally, a host of economic data, including HSBC services PMI, and IIP, will be closely monitored for further cues," Ajit Mishra, SVP, Research, Religare Broking Ltd, said.

The rupee depreciated 4 paise to close at a record low of 85.79 against the US dollar on Friday.

Vinod Nair, Head of Research, Geojit Financial Services, said, "Looking ahead, the market is likely to focus on Q3 earnings, with expectations of improvement in earnings on a QoQ basis."  On the global front, FOMC (Federal Open Market Committee) minutes will be announced during the week.

Last week, the BSE benchmark jumped 524.04 points, or 0.66 per cent, and the Nifty climbed 191.35 points, or 0.80 per cent.

On Friday, the 30-share BSE Sensex tumbled 720.60 points, or 0.90 per cent, to close at 79,223.11. The Nifty tanked 183.90 points, or 0.76 per cent, to 24,004.75.

"Despite the short recovery in the past two sessions, markets lost the momentum as there is still a lot of pessimism due to slowing growth, higher domestic valuations, foreign fund outflows and uncertainty over US trade policies post Trump's resumption as the country's president.

"Hence, markets may see bouts of correction and investors will continue to maintain caution while keeping an eye on global developments," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.